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NIGERIA: Niger Delta Conflict Hurting Local Economy

Sam Olukoya

PORT HARCOURT, Sep 11 2008 (IPS) - A thriving business climate appears to be the main casualty as armed groups agitate for the control of oil proceeds in Nigeria’s Niger Delta region.

There is long-standing anger in Delta communities, where the people feel left out of the profits taken from their land. They say they are yet to benefit from more than 50 years of oil exploitation. Indeed in spite of its huge oil resources, local communities in the Niger Delta remain some of the poorest in the world.

In its monthly oil report for August 2008, the London-based Centre for Global Energy Studies (CGES), projects that Nigeria will earn $66 billion from oil sales this year. Latest figures by Worldoil, an international publication on the oil industry, show that Nigeria is the world’s ninth largest oil exporter.

Virtually all the country’s oil comes from the Niger Delta. Oil proceeds in Nigeria are shared between the Nigerian government, which takes 55 percent of the proceeds, with the rest going to the multinational oil companies operating in the Niger Delta region.

Anger over perceived economic marginalisation in local communities has boiled over. Previous, peaceful demands for a greater share of the oil wealth – for example by the Movement for the Survival of Ogoni People in the 1990s- were violently suppressed by the Nigerian government.

Now the Delta is home to armed groups who mix demands for environmental and economic justice with destroying pipelines and stealing crude wholesale; such groups have kidnapped more than 200 foreign oil workers since 2006. Hundreds of people have been killed within the period during insurgency related violence.

The state of insecurity is one of many factors maintaining high oil prices internationally. Figures by the state owned Nigerian National Petroleum Corporation shows that Nigeria’s oil exports has dropped by a quarter in the last one year. This is the result of both the exodus of foreign oil workers and attacks on oil pipelines.

But little attention has been paid to the thousands of people across the Niger Delta who have lost their jobs as big companies in the region experience a downturn in business.

The activities of such armed groups like the Movement for Emancipation of the Niger Delta and others have caused fear among foreigners working in the Niger Delta. Before the start of the crisis, the region had thousands of foreigners most of them working for multinational oil companies.

“Many large companies with foreigners have either shut down or scaled down their operations as their expatriate workers flee the region for security reasons,” Dr. Sofiri Joab-Peterside of the Center for Advanced Social Science told IPS. The Port Harcourt based centre promotes fundamental and applied research on development problems in Africa.

Within Port Harcourt alone, the tyre manufacturing company Michelin; the American oil servicing company Willbros and Julius Berger, a German construction company with a massive presence throughout Nigeria are amongst companies have closed down operations and laid off all their workers.

Louis Obi, a former human resources manager in Michelin, says there were about 1,500 workers with Michelin when it closed down in May last year. But he says the actual number of people who lost their livelihood due to the company’s closure is as many as twice that number.

“There were lots of staff working at the residential quarters of the expatriates; the company also had a lot of casual labour and contractors. They are not really accounted for in the staff strength but they were all making an income one way or the other from Michelin,” he told IPS.

The Port Harcourt Chambers of Commerce, Industry, Mines & Agriculture (PHCCIMA) a group whose objective is to enhance economic, business and investment growth in the Niger Delta says the insurgency is having a wider impact on the local economy in the Niger Delta. “The in-built internal economy of buying and selling is six times at a greater loss than the formal economy,” Prince Billiy Gillis-Harry, PHCCIMA’s president told IPS.

Dr. Joab-Peterside said the worst affected are informal businesses that usually operate at night. Gunmen from the many armed groups in the Niger Delta region are generally more active after dark.

“Those who earn a living in night clubs have been thrown into the unemployment market,” he added. “Market women, petty traders, fast food sellers and other small businesses have also witnessed a down turn in business because they have to close early.”

Authorities believe that many of the armed men operating at night normally do so with motorcycles. In an effort to improve security, the government has banned motorcycle taxi operators from working beyond 6.00 pm.

But most people in Port Harcourt who live or work outside the regular bus routes rely on commercial motorcycles because they are far cheaper than chartered taxis. “It is no longer economical to move around after 6 pm when the ban on motorcycle taxis takes effect,” says Ahmed Saliu. He says he looks forward to a time when life will return to normal in Port Harcourt and other parts of the Niger Delta region.

But just how soon this will happen remains unclear. Many people agree that normalcy will only return when the crisis ends. Prince Gillis-Harry fears life will grow worse for the people of the region if the crisis is allowed to escalate.

“Local agitation for resource control which started at the village level has today become an international issue because events in the Niger Delta have a way of influencing the price of oil in the international market,” he said. “Care should be taken that the Niger Delta does not go the way of the Middle East,” he added.

Mutual suspicion between local communities on the one hand and the Nigerian government and the multinational oil companies operating in the Niger Delta on the other hand seem to make a resolution of the crisis difficult.

Prince Gillis-Harry says the best way forward is for the government and the oil companies to listen to the agitation of local communities to control their resources.

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